Call Termination Regulations

[26 November 2017] ICASA has published a “Briefing Note on issues raised during the 2017 wholesale voice call termination cost modelling workshop held on 13 November 2017 and one-on-one meeting with licensees from 15-16 November 2017”.

The definitions of Mobile termination markets and Fixed termination markets in terms of regulation 3 of the 2014 Call Termination Regulations remain unchanged with the exception of the exclusion of termination of internationally originated voice calls.

Competition in the relevant markets still remain ineffective.

Each individual Electronic Communications Network Service licensee and Electronic Communications Service licensee that offers wholesale voice call termination services continue to have Significant Market Power in its own network for wholesale voice call termination.

The four market failures as per regulation 7(1) of the 2014 Call Termination Regulations may exist in the absence of regulation.

The pro-competitive conditions imposed on licensees in 2014 are still relevant.

ICASA then notes that it has “received requests to extend the current glide path validity period owing to concerns regarding the time required to conduct cost study in order to determine new termination rates for the next three years. ICASA has reviewed these requests and published the amendment to the Call Termination Regulations, 2014 in terms of sections 4(7)(b) and 67(8) of the ECA to extend the current glide path for a further 12 months.”

ICASA will publish a briefing note on its website by no later than 30 September 2017 outlining the consultative approach and timeliness to determine new termination rates.

Queries should be directed to the Chairperson of the Call Termination Council Committee at CTRreview@icasa.org.za.

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[10 June 2017] ICASA has published a notice and Discussion Document setting out its analysis of pro-competitive conditions imposed on licensees in terms of the Call Termination Regulations 2014, based on the review of those conditions as detailed in the posts below.

each individual Electronic Communications Network Service and Electronic Communications licensee that offers wholesale voice call termination services continue to have Significant Market Power as defined in section 67(5) of the ECA in respect of access to their own networks.

the four market failures as per regulation 7(1) of the 2014 Call Termination Regulations continue to exist.

the pro-competitive conditions imposed on licensees in 2014 are still relevant.

Interested parties have 21 days from publication on 9 June 2017 to submit comments on the analysis and Discussion Document. Submissions can be sent tot ctrreview@icasa.org.za marked for the attention of the Chairperson: Call Termination Committee.

Based on responses received, ICASA will then determine whether public hearings are required before publishing a Findings Document.

The end of this process should be a determination of a new termination rate regime by no later than 30 September 2017.

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[1 March 2017] ICASA have published a media statement in respect of the initial process to review the pro-competitive conditions imposed on licensees in terms of the Call Termination Regulations, in response to queries received about this process and related matters.

[30 January 2017] ICASA has given notice of its intention to commence with a review of the pro-competitive terms and conditions imposed on licensees in respect of rates charged for the termination of voice calls.

Licensees have until 16h00 on 13 February 2017 to submit any queries regarding the questionnaire to ICASA. ICASA will thereafter publish a consolidated response to all queries received in FAQ format on its website.

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[21 March 2016] Housekeeping. Cell C has given notice of its withdrawal of its application for review of the Call Termination Regulations 2014 with particular reference to the mobile termination rates and allowable asymmetry [see entry from 18 December 2014 below].

The current termination rate regime has specified maximum fixed and mobile call termination rates up the end of September 2017. With ICASA due to start a new process in the next few months it is plausible that the withdrawal is simply recognition of the delays in litigating which have made any potential remedy worthless.

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[30 March 2015] ICASA has published a reasons document setting out the reasons for the position it adopted in the Call Termination Regulations 2014.

[23 March 2015] ICASA has issued a press release detailing its findings and determinations in respect of a complaint laid with it by the Internet Service Providers’ Association (“ISPA”) against MTN (Pty) Ltd (“MTN”) relating to MTN introducing a different rate for the termination of internationally-originated calls as opposed to the the termination of locally-originated calls.

ISPA’s complaint was lodged after some of its members received a notification from MTN on 22 October 2014 in the following terms:

“All international originated voice traffic destined for the MTN network will be charged a 0.25USD/minute or equivalent thereof in South African Rand (ZAR) or any other foreign currency as termination rate as of 1 November 2014.

Internationally originated voice calls transiting on MTN’s network to other South Africa networks will be charged at 0.25USD/minute or equivalent thereof in South African Rand (ZAR) or any other foreign currency as termination rate as of 1 November 2014.”

ICASA has come out strongly against MTN’s proposed tariff differentiation:

Differentiation between traffic originating within and outside the borders of South Africa

The Call Termination Regulations, Government Gazette No. 38042 of 30 September 2014 (“the Regulations”) make no distinction between termination services for voice calls originating within and outside of the borders of South Africa.

The service offered by MTN to other licensed operators constitutes termination services as defined in terms of the Regulations.

By charging a different rate for termination between licensed operators in the manner that it has, MTN is in breach of the non-discrimination principles as per section 37 (6) of the Electronic Communications Act.

Amendment of interconnection agreements

Regulations 17 and 19 of the Interconnection Regulations, 2010, Gazette Number 33101 of 9 April 2010 state that an interconnection agreement and interconnection amendment agreement must be submitted to the Authority in terms of section 39 of the Act for filing. Any amendment to an interconnection agreement must comply with regulation 7, read with section 39 of the Act, failing which the amendment would be invalid.

The Authority therefore determines that the notice by MTN informing its interconnection partners what it would charge its interconnection partners is a unilateral amendment of the interconnection agreement. The conclusion of an interconnection agreement must meet the first prerequisite of a contract, which is that parties have reached agreement, as envisaged in section 37(4) of the Act. Therefore the current terms of the interconnection agreements remains binding, until there is mutual agreement between the parties to amend.

ICASA directed MTN to immediately cease collection of the USD0.25 from local interconnecting partners and to comply with the charging regime contained in the Call Termination Regulations, 2014, as reflected in the interconnection agreements.

It remains to be seen whether this will be challenged, but for now we welcome further clarity on the scope of application of the Call Termination Regulations 2014. ICASA is also to be congratulated on acting firmly and expeditiously.

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[18 December 2014] In a nod to the critical role of termination rates to their sustainability, Cell C have given notice of their intention to seek a review of the Call Termination Regulations 2014 with particular reference to the mobile termination rates and allowable asymmetry set out in the 2014 Regulations. To this end Cell C has made a detailed request for information from ICASA which was used in the making of their decision to set the current glide path and asymmetry levels for the mobile termination market.

The rates differ substantially from those set out in the draft linked to immediately below. While an explanatory document will be published in due course, we understand that this was as a result of errors made by ICASA in the modelling undertaken to establish the rates and the degree of asymmetry…

[18 August 2014] As part of the process leading up to finalising new regulations to replace those declared unlawful by the High Court, ICASA has issued a briefing note on the costing standards to be used in determining the extent to which termination rates should be reduced. ICASA has decided to adopt Long-Run Incremental Cost Plus (“LRIC+”) as the cost standard for the purposes of the current review.

[22 May 2014] ICASA has launched a new process to review the wholesale voice call termination markets in South Africa. To this end it has issued a questionnaire to licensees so as to allow it to collect information on which to base its decisions.

Responses to the questionnaires are expected in Excel format only and must be submitted to ICASA via marketreview2014@icasa.org.za on or before Friday the 13th June 2014.

ICASA has issued a press release stating, inter alia, that it is open to responses from the industry on the questionnaires and input from the public on the process. It will host a “questionnaire clarification workshop” in the Block C presentation room at its head office on Friday 23 May 2014 from 10h00-15h00.

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[23 April 2014] Applicable rates to 30 September 2014:

Wholesale voice termination rate to a mobile location (market 1)

Period

Rate

1 April 2014 – 30 September 2014

R0.20

Wholesale voice termination rate to a fixed location (market 2)

Period

WON Rate

BON Rate

1 April 2014 – 30 September 2014

R0.12

R0.16

Maximum asymmetrical rate in market 1 (mobile)

Period

Maximum Rate

1 April 2014 – 30 September 2014

R0.44

Maximum asymmetrical rate in market 2 (fixed)

Period

Maximum Rate WON

Maximum Rate BON

1 April 2014 – 30 September 2014

R0.13

R0.21

(prices per minute ex VAT)

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[11 April 2014] An excellent article by Heather Irvine, Head of Competition at Norton Rose Fulbright which captures the challenge posed to ICASA and the Department of Communications by the judgement in the call termination dispute.

ICASA, in the midst of the court hearing regarding the MTN and Vodacom applications, has thrown a further twist through the publication of the Second Call Termination Amendment Regulations 2014. The effect of this second amendment is to remove all reference to years two and three of the glide path referred to in the Call Termination Regulations 2014, i.e. these regulations now effectively would apply for one year.

It remains unclear when they will come into force, if at all. The South Gauteng High Court is expected to make an initial ruling on Monday 31 March 2014.

While the timelines for the two applications are not yet clear it appears that

– the two applications will be consolidated into a single one

– opposing papers in the MTN application are to be filed by Monday 3 March 2014

– a court date will be agreed upon towards the end of March.

[20 February 2014] ICASA indicated in a further media release that it had decided that the commencement of the 2014 Regulations need only be delayed by one month. It is in the public interest that MTN’s application for interim relief be resolved as expeditiously as possible. After studying the papers, the Council of ICASA is also of the view that a delay of one month is sufficient to ensure that the affected parties have sufficient time to properly prepare their answering papers.

On 19 February 2014 ICASA published the Call Termination Amendment Regulations, 2014 which (i) delay the commencement of the 2014 Regulations by one month from 1 March 2014 to 1 April 2014 and (ii) extend the operation of the 2010 Regulations by one month.

“The application is complex, comprising some 399 pages. Affected parties are afforded very little time to respond, in that answering affidavits are required to be filed by 18 February 2014. The urgent application was enrolled for hearing on 25 February 2014.

ICASA has decided that it is in the public interest for the urgent application to be heard and decided on a less urgent basis. The High Court’s decision will have wide-ranging effects on the parties and the public at large, including subscribers for telecommunications services.

As such, it is important that the High Court is fully informed of all the relevant issues before making its decision and it is therefore necessary that the affected parties have sufficient time to properly prepare their answering papers, particularly given the complexity of the matter.

To this end, ICASA will shortly publish the Call Termination Amendment Regulations, 2014 (the Amendment Regulations) in terms of section 4(1) read with sections 4(7)(b) and 67(8) of the Electronic Communications Act, 2005 (Act No. 36 of 2005) (the ECA) which provisions confer on ICASA the power to make regulations without following the processes described in section 4(4) of the ECA where the public interest requires that a regulation should be made without delay.

The Amendment Regulations will be published to (i) delay the commencement of the 2014 Regulations from 1 March 2014 to 1 May 2014 and (ii) extend the operation of the Call Termination Regulations, 2010/11 (published under GN1015 in the Government Gazette 33698 of 29 October 2010).”

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[13 February 2014] MTN has commenced formal legal proceedings for a review of the Call Termination Regulations 2014, seeking an urgent interdict to suspend the implementation of the provisions of the regulations relating to the proposed new glide path and asymmetry for mobile termination (it appears the impact will be to suspend the implementation of the regulations as a whole).

Details as provided by ICASA below. Comments are due by 16h00 on 24 October 2013.

ICASA NOTICE OF PUBLICATION OF THE DRAFT CALL TERMINATION REGULATIONS AND AN EXPLANATORY NOTE TO ACCOMPANY THE DRAFT “CALL TERMINATION” REGULATIONS

4th October 2013

Johannesburg – The Independent Communications Authority of South Africa has made its determinations on the future of both mobile and fixed termination rates for the next three years, based on a review of industry conditions.

The revised rates are outlined in the tables below:

Table 1: Termination to a mobile location, 2014-2016

Termination Rate

Current

R 0.40

01-Mar-14

R 0.20

01-Mar-15

R 0.15

01-Mar-16

R 0.10

Table 2: Termination to a fixed location: 2014-2016

Between 0N

Within 0N

Fixed Termination Rate

R 0.19

R 0.12

The Authority makes this determination based on a review of the effectiveness of competition in the market for call termination.In 2010 the Authority determined that ineffective competition existed in the provision of call termination because of, amongst others, inefficient pricing. The Authority imposed cost-oriented pricing on Vodacom and MTN for mobile termination and Telkom for fixed termination.The Authority finds that the market remains ineffective with extremely high levels of concentration, where the market for termination to a mobile location and the market for termination to fixed and mobile locations have a Herfindahl-Hirschman Index of greater than 4000, where 1800 is the estimated highest value before a market exhibits ineffective competition.The revised termination rates apply to Vodacom and MTN for mobile termination and Telkom for fixed termination. The Authority further determines that there is a need for further asymmetry based on:

Traffic imbalances reflecting economies of scale

to promote investment

to encourage competition

to foster SMMEs

The level of asymmetry available to licensees offering termination to a mobile location is outlined in the table below:

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